Chapter 5 Flashcards
What is corporate social responsiblity?
Its a concept that considers a business should look beyond its ‘stakeholders’ when making decision
+ It also encompasses the company going beyond just making profit
What is the Pyramid of CSR
It had four main elements (its just a model)
1. Economic - (before a business can do more it needs to be profitable)
2. Legal - a company has a legal responsibility to follow rules and regulations
3. Ethical - Has a responsibility to act more ethical and moral
4. Philanthrophy - Its responsible o give back to the society
What are the pros of CSR
Pros:
1. Easy to understand
2. Simple message
3. emphasizes profit
and cons? (CSR)
- Should ethics be at the top
- Businesses might claim to follow CSR when they don’t
What is the TBL
It explains how companies should focus on not just profit but also
- People (social)
- Planet (environmental)
Concerns
It aims to look at the financial, environmental and social performance of a business over time
Pros of TBL
- Encourages businesses to think beyond profit
- Encourages CSR reporting
- Support the measurement of envioermntal impact
Cons of TBL
- Not an overall useful measure of business performance
- Hard to measure people + plant
- Not legal required
What is ESG
Refers to companies measuring three factors (environmental, social , governance) both for their sustainability and ethical impact of a business or company
What does the E stand for in ESG
Enviormental
What is large part of E
A big part is climate change
What is climate change?
It refers to the global temperatures rising
Why are a lot of companies going net zero?
Net zero refers to which the greenhouse gases going in the atmosphere are balanced by removal out out of the atmosphere.
What are some companies that are going ‘net zero’?
Companies such as ‘lego’
What is ‘greenwashing’
Greenwashing refers to companies spending money to perceive themselves as environmentally friendly but are not
Examples of companies who greenwash?
Fiji Water , Volkswagen
What is a ‘provision’?
It’s a liability that exits however there is uncertainty about both the
- Timing
- Amount of future expenditure.
When does a company record its provision?
1) an entity has a present obligation as a result of a past event;
2) it is probable that an outflow of resources (e.g. cash) will be required to settle the obligation; and
3) a reliable estimate can be made to understand the amount of the obligation.
What if these conditions are not met?
If these conditions are not met, then no provision is recognized and instead a contingent liability is disclosed in the notes to the financial statements.
What is a ‘contingent liability’?
It’s a possible obligation that arises from past events.
What is the journal entry for a Probability liability?
Dr. Provision expense
Cr. Provision Payable
Dr. Provision payable
Cr Revenue (to adjust)
What is a ‘decommissioning provision’?
Its them calculating the present value of cash outflow due to close mines and spending money to restore the enviorment
What is an ‘organizational culture’?
Its a collection of
- Values
- Expectations
-practices
That guide and inform actions of all its members
What does “s’ stand for in ESG
Social
What does the ‘G’ stand for?
Governance
What does ‘good corporate governance mean”
Having a strong tone at the top as they lead by example
What do a lot of companies follow
GRI
What is GRI
Its a global reporting initative that helps businesses take responsibility for their impacts by a providing a ‘global’ common language to help communicate those impacts.
Explain HOW IFRS tried to make a sustainability reporting standards.
GRI and ISSB
What is ISSB made up of
CDSB + VRF
What is VRF made up of?
IRF and SASD
